Advantage Energy Ltd T.AAV

RBC

[retiredcf]

February 23, 2023

Advantage Energy Ltd.
Q4/22 results largely in line; PDP reserves up 15%

TSX: AAV | CAD 8.20 | Sector Perform | Price Target CAD 13.00

Sentiment: Neutral

Quarterly figures – volumes slightly ahead; AFFO largely in line with Street. AAV announced Q4/22 financial and operating results that featured production volumes of 55,773 boe/d (RBCe 54,906 boe/d; Street 54,944 boe/d) driving AFFO (f.d.) of $0.69 per share (RBCe $0.67; Street $0.71). Capex came in above expectations at ~$50 mm (RBCe $38mm; Street $38mm). Variance vs. our model included slightly lower natural gas price realizations than forecast.

2023 guidance – largely unchanged. AAV reiterated its 2023 production guidance of 10% growth from 2022 production (61,346 mboe/d) and expects its 2023 capital budget to be $250–300mm, while returning remaining FCF to shareholders via buybacks.

2P reserves up 6%. AAV's 2P reserve book shifted up to 586 mmboe (2021: 553 mboe), with liquids weighting roughly unchanged at 9% (2021: 9%). 1P reserves followed a similar trajectory, increasing 6% to 417 mmboe (2021: 394 mmboe), and PDP reserves were up 15% to 139 mmboe (see Exhibit 1). The company’s reserve life index now sits at roughly 29 years on a 2P basis (based on Q4/22 production rate).

PDP FD&A cost of $6.62/boe. PDP reserves were added at an FD&A cost of $6.62/boe, vs. the prior three-year average of $6.34/ boe. AAV’s PDP recycle ratio came in at 4.3x in 2022, based on a field netback of $27.25/ boe.